HomeMy WebLinkAboutMontana Taxpayer (2)The association is monitoring a variety of tax and
spending proposals. This session, we realize money is
tight and additional tax reform might not be available,
but we want to make sure the tax reform from the 1999
Legislative Session remains in place since Montana's
property tax structure is finally in, a more competitive
position with surrounding states. We believe that this
was a positive message to taxpayers and businesses in
Montana.
We are pleased with Governor Martz's pledge of no new
taxes. We have taken a position of opposing any
legislation implementing new taxes including increases
in excise or selective sales taxes such as
telecommunication excise tax and the universal system
benefits tax since these' are paid directly by the
consumers. We will consider new proposals that have
corresponding tax reductions.
On individual income tax proposals, we are taking a wait
and see position until all amendments and fiscal notes
are finalized. We prefer overall tax reductions rather
than any shifting between classes of taxpayers. We
continue to support the ability for married couples to file
separately on the same return and the deductibility of
federal income taxes.
We will be supporting clarification of the determination
of mill levies for local government. Mill levies have
continued to increase each year due to the ability of local
governments to float levies to produce the same level of
revenue as the prior year. Since there are no carry-
forward provisions, there currently is no incentive to
hold the line on levy increases.
Important Legislative Dates
January 3 - Legislative Session Begins
February 13 - 36" Legislative Day - last day for
committee to request general bills.
February 23 - 45'n Legislative Day - transmittal
of general bills to other chamber.
February 24-27 - Transmittal Break
March 19 - 62nd Legislative Day - last day for
committee action on revenue bills.
Important Legislative Dates (continued)
March 31 - 73`d Legislative Day - transmittal of
amendments to general bills.
April 3 - 75ih Legislative Day - last day to request study
resolutions or committee bills to implement
HB2.
April 5 - 77" Legislative Day - final day for committee
action on senate revenue bills in house.
April 9 - 80th Legislative Day - transmittal of
amendments to appropriation bills.
April 11 - 82nd Legislative Day - transmittal of
amendments to revenue bills and revenue
estimating joint resolution.
April 13-16 - Legislative Break
April 18- 850 Legislative Day - transmittal of interim
study resolutions.
April 24 - 90 Legislative Day - Sine Die!
Status of Bills as of January 26, 2001
Introduced Bills: 773
Un-introduced Bill Draft Requests: 940
Total: 1.713
Bills Active in the House: 386
Bills Active in the Senate: 307
Resolutions Adopted: 4
Bills Signed by Governor: I
Bills Tabled in House: 40
Bills Tabled in Senate: 28
Drafts Cancelled: 145
Comments on Local Option Tax Legislation
While we appreciate the difficulties faced by local
governments for funding, we don't believe a local option
sales tax is the answer. Once a new revenue stream is
available to any government, it is difficult, if nearly
impossible to take it away. Any future comprehensive
tax reform becomes more difficult to achieve.
At the national level 40 out of the 45 states that impose
statewide sales taxes are involved in an effort by the
National Conference of State Legislatures to implement
a unified system and simplify the collection of sales
taxes. The goal is to incorporate uniform definitions
within tax bases, simplify audit and administrative
procedures, centralize collection and registration and
utilize emerging technologies to substantially reduce the
burdens of tax collection. Specific sections outline the
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olume 35 Number 1 January 2001
Montana Taxpayer
Address all communications to:
MONTANA TAXPAYERS ASSOCIATION
P.O. BOX 4909, HELENA, MT 59604
Telephone (406) 442-2130
FAX (406) 442-1230
E-mail - mwhitt@montax.org
12liyatt@montax.org
Business Office: 506 North Lamborn
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OFFICERS AND STAFF
CHASE T. HIBBARD, Helena.... Chairman, Board of Directors
BILL SPILKER, Helena, Vice Chairman, Board of Directors
MARY WHITPINGHILL, Helena.... President
PAM HYATT, Helena.... Office Manager
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DIRECTORS
Contractors -John Harp, Kalispell
Cooperatives - Jeanne Barnard. Malta
Director at Large-Tom Rolle, Helena
Fan Machinery -Gordon Nelsen, Conrad
Financial-Craig Anderson, Billings
Gas & Electric- Emie KindL Butte
Grain Growing - Daryl Ayers, Denton
Hardware Stores - Terry Taylor, Calstrip
Mining - Russ Ritter, Helena
Motor Carriers -Ken Crippen, Missoula
Railroads -Alec Vincent, Texas
Real Estate-Bill Spilker, Helena
Retail - Marilyn Hudson, Helena
Sheep & Wool- Chase Hibbard, Helena
Telecommunications - Rick Hays, Helena
Timber Products - Doug Mood, Seeley Lake
state to enter into the agreement.
Those include, uniform state rates, uniform standard,
uniform definitions and central registration. For
Montana, one of four states without a general statewide
sales tax, to begin allowing local governments to
piecemeal in new taxes creates all the problems they are
tr, ing tc reef y and get their arms around at 4-he national
level.
Areas in the state that currently have resort taxes have
described the ease of administration. For example, West
Yellowstone has a part time person to collect the resort
tax. But, compare West Yellowstone's 277 businesses
with Billings' nearly 7,000 businesses. Every locale
implementing this tax will need more revenue agents -
each of them will be performing the same type of job of
the new revenue agents in the other local communities.
We think creating multiple revenue agencies throughout
the state only adds to the burdens businesses will face
for collecting these taxes for local governments.
Although two of the bills recently heard (SB155 and
S13213) define the types of goods and services subject to
taxation, it does not limit the list. The result will be
differing tax bases in each locale adopting a tax. Add to
this complexity, the recent attorney general's opinion
that concluded the tax rate can be different for different
goods.
We keep hearing about removing regulations for
businesses and making it easier to operate in Montana -
this proposal just adds to the cost of doing business.
Local option taxes inherently create imbalances in the
tax structure. They unfairly penalize businesses in
localities that choose to impose the rate, while benefiting
businesses located outside.
In the past, strong opposition came from the areas in the
state where a local option tax would not create sufficient
revenues to warrant a tax. The result would be little
islands of prosperity - further adding to the burdens of
taxpayers located in outlying communities. They shop
in the retail areas, but do not receive the benefits of
paying a sales tax. While both bills address some of
those coneeitts by requiring the larger municipalities to
share some portion of their tax collections, we still
believe this will add to the gap between rural and urban
areas.
What do Montanans think of local option taxes? We
have been taking a survey of our members and would
like to share some of the results. Although this is
certainly not scientific, it serves to gauge some of the
feelings of Montanans. The respondents were interested
in overall tax reform. However, they were not
convinced local option taxes are the answer either. By a
margin of 2 to 1, they would rather see reform at the
state level, rather than local.
If tax reform is necessary and desirable in Montana, let's
design a balanced system that serves as the model for the
other states. Let's not push through a system that 40
other states are trying to fix.
The Legislative Budgeting Process -What comes in
usually goes out!
This article was taken in large part from "Understanding State
Finances, The Budgeting Process," Taryn Purdy, Principal Fiscal
Analyst, Legislative Fiscal Division
Coming In - Constitutionally, the legislature cannot
appropriate more expenditures from the general fund
than can be met through anticipated available funds.
Therefore, the legislature must estimate general fund
revenues (and other adjustments to the general fund
balance) during the legislative session. This revenue
estimate is formally adopted in House Joint Resolution 2
(HJR 2). The legislature and the Governor are required
to use these estimates until amended or approved by the
legislature.
Going Out - Appropriations can be provided in one of
three ways:
1) Temporary appropriations. These appropriations
are made for a two-year period and then expire. Most
appropriations to operate state government are made in
one temporary appropriations bill - 1113 2, the Gcncral
Appropriations Act. Appropriations can be made in
other bills as well, generally called "cat and dog" bills.
While many functions of state government are ongoing,
the legislature must still reauthorize funding for those
functions every two years.
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2) Statutory appropriations. These appropriations are
made within codified law and do not expire. Rather than
examine these appropriations every two years, the
legislature allows the function to be funded on an
ongoing basis, and must change statute to adjust the
appropriation in any way. Because statutory
appropriations are not regularly examined every two
years, the legislature attempts to limit their use to those
instances in which payments must be made, and/or in
which the amount of the revenue collected or payments
rcxlvcd cannot, with any -easJnab;cness, be predicted
for the purpose of providing a temporary appropriation.
3) Budget amendments. The legislature is not in
continual session, and yet events that require action can
occur during the interim between sessions. For this
reason, the legislature has voluntarily given up a portion
of its appropriations powers under very limited
conditions. Various approving authorities (most often
the Governor) can approve the addition of federal funds
(and state special revenue funds if an emergency exists)
received between sessions and not anticipated by the
legislature. The funds cannot be considered part of
ongoing operations and if they are to continue must be
separated for specific authorization by the legislature in
the next session.
Temporary appropriations can be classified in three
categories: 1) General Appropriations Act - HB 2.
Most of the spending side of the equation is .found in
HB2 which contains bulk of appropriations to support
the on-going functions of state government. As such, it
is large and complex, containing individual
appropriations for each program in state government, as
well as the results of the legislative review of all aspects
of agency operations.
2) Long-Range Planning Bills - Other bills that address
Montana's long-term capital requirements, the payment
for which may be either through cash or the acquisition
of debt, are written and reviewed separately from HB 2.
The following lists the major long-range planning bills
reviewed during each legislative session. Other capital
asset bills may be heard as well, depending upon current
issues and legislative interest.
HB 5 and HB 14 contain the cash and bonding
authorizations (respectively), for the long-range
building program. Specific projects are approved and
funded through these bills.
HB 6 and HB 8 are the bills that fund the state's
renewable resource grants and loans, the purpose of
which is to fund projects that promote the
"conservation, development, management, and
preservation of water and other renewable resources."
The grants and loans are funded with Resource
Indemnity Trust (RIT) funds.
HB 7 funds the RIT Reclamation and Development
Grant Program. These grants are used to address
environmental damage due to non-renewable resource
extraction and to develop and ensure the quality of
public resources.
HB 9 funds cultural and aesthetic grants for protection
of works of art in the State Capitol and other cultural
and aesthetic projects. The grants are primarily funded
through coal severance tax revenues.
HB 11 includes authorizations from the state's Treasure
State Endow acnt Prog:arn (TSEP); which is an
infrastructure-financing program funded from the coal
trust.
HB 10 and HB 12 allocate oil overcharge funds received
by the state as a result of a federal court action holding
that certain oil producers violated federal oil price and
allocation controls between 1973 and 1981. The
program is used to fund energy conservation and low-
income assistance programs.
3) Other Appropriations - Frequently Referred to as
Cat and Dog Bills. This designation includes any other
bill with a valid appropriation included in its body. Most
cat and dog bills include appropriations to expend funds
in the next biennium. However, in addition to those
bills, there are three major cat and dog bills that
appropriate money in the current year, as opposed to the
next biennium.
HB 1 contains all appropriations needed to operate the
legislative session, and includes provisions for session
staff and printing costs.
HE 3 contains all requests for additional general fund
and state special revenue money in the current year
with which to address anticipated shortfalls.
HB 4 includes appropriations for federal funds (and
limited state special revenue and other funds) for the
current year, received by an agency but for which it
doesn't have spending authority.
The principal appropriation committees of the legislature
are: 1) the House Appropriations Committee; and 2) the
Senate Finance and Claims Committee. All
appropriations bills must originate in the House of
Representatives (the House). These bills, and other bills
with major fiscal impact, are assigned to the
Appropriations Committee for review and
recommendation to the full House. Appropriations bills
can be transmitted to the Senate from the House no later
than the 67`h day, as opposed to the 45°i day for most
other bills. After transmittal, appropriations bills are
assigned to Finance and Claims for review and
recommendation to the full Senate. (While
appropriations bills must originate in the House, the
House may amend appropriations on to transmitted
Senate bills.)
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NCSL Releases Comprehensive Preview of State Finances as
State Legislatures Begin Budget Deliberations
A December 2000 survey of legislative fiscal staff in 50 states
and the District of Columbia by the National Conference of
State Legislatures, highlights state fiscal conditions and the
key issues facing the nation's legislatures this year. While
most states report that the fiscal outlook for the rest of FY2001
is positive, some are more guarded, citing concerns about the
strength of the economy.
The key. issues to be. addressed by die 44 legislatures in
session this year are education finance, especially capital costs
and teacher salaries and covering the rising cost of Medicaid.
In fact, most states are faced with supplemental budget
appropriations due to cost overruns for various programs,
especially for Medicaid.
Compared with recent years, 2001 sessions are expected to be
relatively quiet on the tax front. Thirteen states and the
District of Columbia do not expect any tax changes. Tax cuts
are expected to be discussed in at least 20 states, although this
number could grow as governors present their budget requests
and legislators begin bill introductions. Last year, 31 states
cut taxes. But multiple years of state tax cuts and
uncertainties about the economy have reduced the number of
states likely to consider major tax cuts in 2001. A half dozen
states also will consider tax increases for specific programs.
Overall, tax cuts are expected to exceed any increases, so the
net state tax change is likely to be a reduction, although not of
the magnitude seen in recent years.
SURVEYS: We still want to hear from you!
Thank you to all who have responded but to those who
haven't, please continue to send in your surveys or go to
our web site, www.montax.org and fill out the survey
online.
New Study Grades States on Fiscal Responsibility; Spending
Grows by Over 27 Percent in Every Region During 1990s
A new study grading each state's record of fiscal responsibility
was released today by the American Legislative Exchange
Council (ALEC), the nation's largest bipartisan membership
association of state legislators. The National Report Card on
State Fiscal Policy: Recent Trends in Taxing and Spending
finds that state expenditures per capita (adjusted for inflation)
grew by over 27 percent in every region during the past
decade. In some regions state spending grew by as much as 50
percent. Ominously, as the national economy cools many
states lace a poieudal funding crisis as tax revenues return to
historic levels.
"The good news is that the states' share of an individuals tax
burden has remained constant at 11.3 percent of personal
income," said Douglas Lathrop, ALEC's director of Tax and
Fiscal Policy and author of the study. "But this is only due to
the fact that personal income growth has outstripped tax
collections. The bad news is that unprecedented budget
surpluses won't last forever yet states keep spending like the
sky's the limit."
The new study covers the years 1990-2000, and measures total
state spending, and whether the state is increasing or
decreasing its spending, relative to resident's personal income.
Each state receives letter grades indicating each state's record
of fiscal responsibility during the 1990's. Montana received a
C+ for 2000 with 5.7% general fund spending as a percent of
personal income. South Dakota received an A (4.3%),
Wyoming a B (4.6%), North Dakota a C+(5.3%), and Idaho a
C (5.8%).
Economist Richard Vedder concluded in a preface to the
report mat Lire prevaience of the evidence shows that stales
that follow Jeffersonian principles of limited government not
only leave more income for their citizenry, but also exhibit
higher rates of growth in income, output, consumption and
employment over time. From 1965 to 1992, real income per
capita rose 80 percent in the 25 states with the lowest average
tax burdens, but only 60 percent in the other states with the
highest taxes. Additionally, the statistics showed that from
1990 to 1999, some 2.8 million native bom Americans
migrated from the other 41 states with individual income taxes
to the nine states that do not have individual income taxes.
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